Threatened Rent Increases at Rural Development Properties
Authored By: Iowa Legal Aid
The United States Department of Agriculture (USDA) Rural Development (RD) office provides low cost loans and financial incentives to encourage housing projects in rural areas. RD housing projects provide affordable, subsidized housing often for people who are elderly or have a disability. Many RD properties have contracts with the USDA to allow rent there to be less than usual market rates. Rent is based on household income. However, many of the contracts were underfunded this year. For that reason, some RD properties have been warning tenants that they many face increased rents in the future.
What should I do if I receive notice of a potential rent increase for my Rural Development rental unit?
Review the notice carefully. Several Rural Development projects in Iowa have sent notices to tenants warning about potential rent increases in the future. However, most of the notices reviewed by Iowa Legal Aid warn only of future rent increases. Most of these notices do not actually demand increased rent payments right now. If you do not understand the notice, call Iowa Legal Aid for advice.
Can my rent actually be increased? What do I do if the rent for my rental is actually increased?
There are limits on when and how rent may be increased at an RD project.
Normally, your rent payment cannot be increased during a lease-for-term.
- So, if your lease is valid through a particular date, your rent should not increase until your lease term ends.
Notice of any increase in the rental amount should also be given to you in writing.
- The new rental amount would likely be noted in any new lease that you are asked to sign.
If you do not have a written lease or if you have a written lease that is month-to-month, you could be told about a rent increase through a written notice given to you by your landlord.
- However, the landlord is required to give you written notice of the rent increase at least 30 days before rent in the new amount is due.
Is there any limit to the amount of a rent increase?
Yes. RD rent may only by increased by 10% in any 12 month period. So, your rent can only be increased by 10% per year. The 10% rent increase rule is imposed by federal law and only applies to RD properties.
- Iowa Legal Aid provides help to low-income Iowans.
- To apply for help from Iowa Legal Aid:
- Iowans age 60 and over, call 800-992-8161 or
- apply online at iowalegalaid.org